Airline Mergers and Alliances

Although airlines have long sought to enter alliances with one another, the last decade has seen an important new development – the crystallisation of internation al airline alliances around a small number of major airline groupings. The scope and nature of these alliances differ, but there is a tendency towards deeper alliances involving co-operation on all aspects of the airline business. These super-alliances are coming as close to actual mergers as aviation’s Byzantine regulations allow, raising fundamental questions for competition policy-makers and enforcers. Alliances have the potential both to enhance the level and quality of services offered to consumers and, at the same time to significantly restrict competition. Why do airlines seek to enter such alliances? What are the benefits to the airlines or consumers? How do alliances restrict competition? What is the role played by frequent-flyer programmes and other loyalty schemes? What remedies should competition authorities consider to alleviate the harmful effects of alliances? What is the appropriate role for international co-operation between authorities? This document comprises proceedings in the original languages of a Roundtable on Airline Mergers and Alliances which was held by the Committee on Competition Law and Policy in October 1999. It is published under the responsibility of the Secretary General of the OECD to bring information on this topic to the attention of a wider audience. This compilation is one of several published in a series entitled “Competition Policy Roundtables”.